South Sydney District Rugby League Football Club Ltd v News Ltd

REASONS FOR JUDGMENT 1 The one outstanding issue in this proceeding relates to costs. Notwithstanding that it was unsuccessful in all claims made against the first to fourth respondents (these were the only respondents against whom relief was sought directly), the applicant, South Sydney District Rugby League Football Club Ltd ("Souths"), has submitted that a proper exercise of my discretion would result in orders that (i) the costs of the first four respondents ("News", "NRLI", "ARL" and "NRL") be limited to one set of costs; and (ii) the costs of the remaining respondents ("the Club respondents") be limited to the costs of their appearance on 16, 19 and 20 June 2000 and of the making of written submissions. The dates specified, I would note, were the first three days of hearing of the opening of Souths' case. 2 In dealing with this submission I do not intend to narrate again in any detail the respective roles played out by the various respondents in the circumstances giving rise to this litigation nor the plethora of claims pleaded against the first four respondents. Those matters have been dealt with extensively in my earlier reasons dismissing Souths' application. I incorporate those reasons by reference into the present reasons. 3 While not questioning the width of the discretion as to the award of costs conferred on this Court by s 43(2) of the Federal Court of Australia Act 1976 (Cth), Souths' submission is that its proper exercise in this case would be in accordance with the principle stated by Woodward J in Statham v Shephard (No 2) (1974) 23 FLR 244 at 246 that "the court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases". To that principle his Honour added three provisos (at 246-247): "[First], if a conflict of interest appears possible but unlikely, the defendants should make any necessary inquiries from the plaintiff as to the way in which his case is to be put if this would resolve the possibility of conflict between defendants. … Secondly, there could be circumstances in which, although the defendants were united in their opposition to the plaintiff, their relationship to each other might be such that they would be acting reasonably in remaining at arm's length during the general course of litigation. Thirdly, even if defendants are acting reasonably in maintaining separate representation for some time or for some purposes, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time." The Costs of the First Four Respondents 4 News and its subsidiary NRLI were represented in this proceeding by the same counsel and solicitors, while both ARL and NRL had separate representation both by counsel and by solicitors. 5 It is Souths' contention that News, NRLI and ARL should be held to have had identical interests, there being no possible conflict of interest between them in the presentation of their cases. NRLI is a subsidiary of News and is ARL's partner. In relation to NRL it is contended that my particular agency finding meant that, for the purposes of the principle in Statham's case, NRL's interests were identical to those of the NRL partners (ie NRLI and ARL) so disentitling NRL to an independent costs award. It is further contended in the alternative that even if the Statham principle did not embrace it, NRL should not have its costs. There was no apparent reason why a proper defence to all of Souths' claims could not have been presented by News, NRLI or ARL and it is noted that, in large part, Souths' contract claim was defended by NRL. 6 I would have to say that when one has regard (a) to the factual setting that gave rise to Souths' claim and to the respective positions and changing relationships of the four respondents in that setting; (b) to the complexity and expanding character of particularly the contract claims made; (c) to the relief sought and its possible distinct consequences for the respondents severally; and (d) to the orderly division in the practical presentation of the case made by these respondents - there is a marked air of unreality in Souths' submissions. With Souths challenging the very basis of the peace deal that ended the "Super League war", it was proper and reasonable for all of the first four respondents to be represented at the hearing to ensure the protection of their several interests in the matter. 7 Even if it could be said that in the end no actual conflict of interests actually emerged at the hearing, the case was one in my view in which the respondents reasonably could have apprehended that possible conflicts could have arisen. In this I agree with the News and ARL submissions. It is not to the point that my findings in the end may have negatived the bases for such apprehensions. In quite a variety of ways Souths called into question the actions inter se and the relationships of not only the News interests (ie News and NRLI) and ARL but also of the News/ARL interests and NRL. This was done, moreover, in a fashion that could have given the respective respondents concerned in a particular claim potentially differing interests despite their joining to secure a common outcome by way of defence to that particular claim by Souths. Emblematic of the state of affairs I have described were the various contested agency arguments levelled against ARL (contract claims) and NRL (s 45 claim), and the allegation of misleading disclosures News is said to have made to the NRL Partnership Executive Committee and to NRL relating to payments made to Super League clubs. 8 I am far from satisfied that the case was one in which it could properly be said that there was no possibility of conflict of interest between the News interests and ARL. Moreover, against the background (i) of these parties' relationships during and in the aftermath of the Super League war; (ii) of the factual subject matter inquired into, its complexity and its evolution during the trial; and (iii) of the several claims made against these respondents, I am satisfied that it would have been reasonable in any event for these parties to have remained "at arm's length during the general course of litigation" even though they were united in their opposition to Souths' application. 9 It is the case that, while fully represented at the hearing, ARL was a passive participant. It (a) did not advance a defence independent of those put by News/NRLI and NRL and (b) adopted the submissions of News/NRLI and NRL to the extent applicable to it. In so doing it both acted reasonably in the circumstances and avoided duplication of cost and effort. 10 I do not accept that the ordinary rule as to costs should not apply to News, NRLI and ARL. 11 Insofar as NRL is concerned there clearly was no basis for applying the Statham principle to it. The separate claims made against it, the allegations made against it and its employees and the likely differential impact upon it in the event that the injunctive relief sought was granted, made it entirely appropriate that it be fully and separately represented at the hearing. NRL, furthermore, disputed and (in its notice of contention) continued to dispute the allegation (and now my particular finding) of agency. I consider that the manner in which it conducted its representation at the hearing represented an appropriate and practical response to a situation of some complexity. Its particular interest in the contract claim made it appropriate (vis-ŕ-vis the News interests) for it to assume much of the carriage of that part of the defence to Souths' application. Moreover the basis for dividing "defence witnesses" between News employees on the one hand and NRL related persons on the other was likely to have assisted in the duplication of cost. I am satisfied that NRL is entitled to a costs award as a successful respondent. 12 I would add that I consider that the first four respondents took appropriate steps to render a complex and evolving litigation manageable. It would be quite unfair that they be punished for so acting in the costs award made. The Club Respondents 13 As I indicated in the principal reasons for decision, South's made plain that it did not seek by its claim to have any team excluded from the NRL competition. For this reason it contends it should not have to pay for the Clubs' full representation throughout the hearing. 14 While not contending that the Club respondents were not entitled to separate legal representation and to make written submissions in relation to the possible effect on them of any relief granted to Souths, Souths contends that their involvement at the hearing beyond the third day of opening and in preparing their submissions, was unnecessary. Their costs, it is submitted, should be limited accordingly, a full costs award being unjust and unreasonable in all the circumstances. 15 The Clubs have submitted that while Souths may have made it plain that it was not seeking to exclude any Club from the NRL, the nature and extent of the relief sought by it was in contention throughout the hearing. The Clubs had a real and separate interest in the question of the relief sought by Souths and it was reasonable for them to appear to protect their positions in relation to that issue. 16 Equally, Souths' pleadings raised various questions of fact concerning the Clubs in relation to the application of the NRL Selection Criteria. Much of the evidence relied on by Souths concerned the Clubs, including financial information, strategic plans and information concerning players, sponsors and employees. It was reasonable for the Clubs to appear to protect their interests to guard against adverse findings of fact in relation to those matters. In the circumstances, there is no reason why Souths should not be ordered to pay all of the costs of the Club respondents. 17 Despite the apparent reasonableness of Souths' submission, the very distinctive circumstances of this case and the very vital interest the Clubs had in the matter rendered their continuing separate representation in the case appropriate. Remedy and its possible impact on the Clubs (as well as NRL) was always going to be a vital and contentious issue in this proceeding. With their interests inextricably bound up in the proceeding, and with quite a deal of Souths' focus being on the circumstances of the Clubs and their players (particularly in the application of the Selection Criteria), I am unable to say that the Clubs were acting unreasonably or unnecessarily in maintaining the level of representation at the hearing that they did. They are entitled to their costs of the proceeding. 18 I will order the applicant to pay the respondents' costs of the application. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.